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Economic stabilization, conditionality, and political stability

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  • Bienen, Henry S.
  • Gersovitz, Mark

Abstract

IMF conditionality is seldom so important that it dominates all other considerations for political stability. IMF stabilization programs often shift benefits from one group to another. They expose elites to charges of selling the sovereignty of their countries. The imposition of IMF conditions, particularly subsidy cuts, may lead to sharp outbreaks of civil disorder. Nonetheless, the IMF provides resources that make adjustment easier and thus may lessen the chances of political instability for a country. IMF programs are seldom implemented fully as negotiated, and the penalties for partial compliance are not great. Debtor countries have more flexibility in imposing austerity measures, and the economic constraints are less binding than often assumed. The very availability of alternatives to IMF programs results in internal divisions because some favor debt repudiation and others oppose it. Groups now contend over solutions to the debt problems of their countries.

Suggested Citation

  • Bienen, Henry S. & Gersovitz, Mark, 1985. "Economic stabilization, conditionality, and political stability," International Organization, Cambridge University Press, vol. 39(4), pages 729-754, October.
    • Handle: RePEc:cup:intorg:v:39:y:1985:i:04:p:729-754_02
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    Cited by:

    1. Stephanie J. Rickard & Teri L. Caraway, 2019. "International demands for austerity: Examining the impact of the IMF on the public sector," The Review of International Organizations, Springer, vol. 14(1), pages 35-57, March.
    2. Stephan Haggard & Robert Kaufman, 1989. "The Politics of Stabilization and Structural Adjustment," NBER Chapters, in: Developing Country Debt and the World Economy, pages 263-274, National Bureau of Economic Research, Inc.
    3. Jeffrey Frankel, 2005. "Contractionary Currency Crashes In Developing Countries," CID Working Papers 117, Center for International Development at Harvard University.
    4. Psofogiorgos, Nikolaos - Alexandros & Metaxas, Theodore, 2017. "IMF, Democracy and Economic Development: Review and Critique," MPRA Paper 79403, University Library of Munich, Germany.
    5. Jacky AMPROU, 2003. "Interest Groups and Demand for IMF Arrangements: Empirical Analysis of the Duration of Periods without Agreement between the IMF and Sub-Saharan African Countries," Working Papers 200301, CERDI.
    6. Frankel, Jeffrey, 2010. "Monetary Policy in Emerging Markets," Handbook of Monetary Economics, in: Benjamin M. Friedman & Michael Woodford (ed.), Handbook of Monetary Economics, edition 1, volume 3, chapter 25, pages 1439-1520, Elsevier.
    7. Giga ABUSERIDZE & Inga PALIANI-DITTRICH & Moris SHALIKASHVILI & Vitolds ZAHARS, 2022. "Challenges and economic adjustment policies in the EU," Access Journal, Access Press Publishing House, vol. 3(2), pages 136-146, April.
    8. Prein, Timm M. & Scholl, Almuth, 2021. "The impact of bailouts on political turnover and sovereign default risk," Journal of Economic Dynamics and Control, Elsevier, vol. 124(C).
    9. Nikolaos Alexandros Psofogiorgos & Theodore Metaxas, 2017. "IMF, Democracy and Economic Development," Bulletin of Political Economy, Bulletin of Political Economy, vol. 11(1), pages 21-44, June.
    10. Stephan Haggard & Robert Kaufman, 1989. "The Politics of Stabdization and Structural Adjustment," NBER Chapters, in: Developing Country Debt and Economic Performance, Volume 1: The International Financial System, pages 209-254, National Bureau of Economic Research, Inc.
    11. Stephen C. Nelson & Geoffrey P. R. Wallace, 2017. "Are IMF lending programs good or bad for democracy?," The Review of International Organizations, Springer, vol. 12(4), pages 523-558, December.
    12. Kern, Andreas & Nosrati, Elias & Reinsberg, Bernhard & Sevinc, Dilek, 2023. "Crash for cash: Offshore financial destinations and IMF programs," European Journal of Political Economy, Elsevier, vol. 78(C).
    13. Wayne Nafziger & Juha Auvinen, 1997. "War, Hunger, and Displacement: An Econometric Investigation into the Sources of Humanitarian Emergencies," WIDER Working Paper Series wp-1997-142, World Institute for Development Economic Research (UNU-WIDER).

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